Energy Storage Compared to Conventional Resources Using LCOE Analysis

“[…] “Although in its formative stages, the energy storage industry appears to be at an inflection point, much like that experienced by the renewable energy industry around the time we created the LCOE study eight years ago,” said George Bilicic, the head of Lazard’s energy and infrastructure group, in a release about the report.

Lazard modeled a bunch of different use cases for storage in front of the meter (replacing peaker plants, grid balancing, and equipment upgrade deferrals) and behind the meter (demand charge reduction, microgrid support, solar integration). It also modeled eight different technologies, ranging from compressed-air energy storage to lithium-ion batteries.

“As a first iteration, Lazard has captured the complexity of valuating storage costs pretty well. Unlike with solar or other generation technologies, storage cost analysis needs to account for not just different technologies, but also location and application, essentially creating a three-dimensional grid,” said Ravi Manghani, GTM Research’s senior storage analyst.

In select cases, assuming best-case capital costs and performance, a handful of storage technologies rival conventional alternatives on an unsubsidized basis in front of the meter. Using lithium-ion batteries for frequency regulation is one example. Deploying pumped hydro to integrate renewables into the transmission system is another. […]